Karoon Closes Acquisition of Bauna FPSO Offshore Brazil

Karoon Energy Ltd’s Brazilian subsidiary, Karoon Petróleo & Gás Ltda., has completed the acquisition of the Baúna floating production, storage and offloading vessel (FPSO), the Cidade de Itajaí, from Altera & Ocyan (A&O).

The total consideration for the FPSO was $115 million plus approximately $8 million in transaction costs, with the final payment of $85 million made on April 30, Karoon said in a news release.

The company said it signed a transition services agreement with A&O to ensure continuity of operations and a smooth handover process as Karoon assumes greater operational control of the FPSO, which operates in the southern post-salt region of the Santos Basin, Brazil.

The tender process for a new service provider(s), who will support Karoon as operator of the FPSO into the future, is “progressing as planned” and is expected to be completed in mid-2025, the company said.

Karoon Managing Director and CEO Julian Fowles said, “Taking ownership of the Cidade de Itajaí FPSO marks a significant milestone in Karoon’s evolution over the past five years from an explorer to an operator of offshore oil and gas production assets. Owning the FPSO gives Karoon direct strategic control over the facility. This will enhance our ability to manage operational performance and reduce long-term operating costs, as well as provide us with greater flexibility to revitalize the facility, thereby potentially extending field life and increasing the value of the Baúna Project. We are grateful to A&O for their partnership and support throughout the sale and transition process and look forward to continuing our focus on safe, reliable and efficient operations”.

The Cidade de Itajaí FPSO has been operating on the Baúna project production since the field came onstream in 2013. It has a nameplate fluid handling capacity of approximately 80,000 barrels of liquid per day and a nameplate storage capacity of approximately 631,000 barrels of oil.

Potential Neon Project Advances

Meanwhile, Karoon said that the potential development of the Neon field offshore Brazil has moved into a “Define” phase after extensive technical and commercial work.

Neon is located in Block S-M-1037, 75 kilometers northeast of the Baúna Project in the Santos Basin. “The estimated economics for this opportunity have improved materially and confirm that a Neon standalone development has the potential to be an attractive, value accretive growth opportunity,” Karoon said in a separate news statement.

The Define phase will involve undertaking work to further mature the Neon opportunity towards a possible final investment decision (FID), the company said.

Development of the resource is expected to take place in phases, with the first phase targeting 60 – 70 million barrels of the total contingent resources, and with subsequent phases expected to develop additional recoverable volumes, Karoon noted.

Fowles said, “Moving the potential Neon development into the Define phase is a significant milestone for Karoon. Over the past year, the team has progressed Neon through a number of important steps. This has involved fully reprocessing the existing 3D seismic data, recalibrated with the Neon-1 and 2 well data, and rebuilding the geological models with these data and updated petrophysical evaluations. The result is a full bottoms-up reevaluation of the Neon resource, certified by independent experts Miller and Lents Ltd. We have also validated the preferred concept as a standalone development, enabling a better constrained and more robust Neon development”.

“If it proceeds, the Neon development would significantly increase Karoon’s booked Reserves at FID and production towards the end of this decade, more than offsetting Baúna Project production decline and creating material long-term value for shareholders. A number of infill opportunities have been identified as part of DG-2, and further development phases could extend the economic life of a potential Neon development well into the 2040s. Neon could also become a hub for developing the existing discovered 27 [million barrels] of 2U contingent resources at Goiá3 and prospective resources in the nearby Neon West prospect,” Fowles added.

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